It is common practice for consumers to pay a merchant electronically for goods or services received. Electronic payments are typically made with a token that identifies a source of funding. For example, a credit card containing a magnetic strip is a token. Payment tokens usually contain static information, such as an account number, identifying a source of payment. When a credit card is swiped, the card number is transmitted to a centralized payment-processing system. Before authorizing payment, the centralized payment-processing system may verify whether the account exists and is active, whether the account can fund the transaction, and/or whether the transaction may be fraudulent.
The merchant may pay two separate entities in the course of processing a credit card or debit card transaction. It pays an interchange fee to the bank that issued the consumer's card (the issuing bank) and an assessment fee to the card brand (e.g., VISA). Most merchants are not equipped to handle the data security required to process the transactions themselves and instead use the services of a third-party payment processor to move the transaction through the card network. While interchange and assessment fees are fixed regardless of which processor a merchant uses, the fee added by a payment processor (“markup costs”) can vary greatly from one payment processor to the next. Factors affecting these differences include not only variations in overall rates but also pricing differences based on the card used by the consumer, the type of transaction, overall transaction volume, even the date and time. These variations make it difficult for a merchant to select the processor that will assess the lowest fees possible for a particular transaction. One processor may charge a low markup cost for one type of transaction (e.g., debit card usage) but a high markup cost for another type of transaction (e.g., a transaction under $100) while another processor's pricing plan is the opposite. Unfortunately, a single merchant does not usually have a high enough credit/debit card transactional volume to enter into a contract with more than one processor, and must therefore accept the pricing model imposed by a single payment processor.
Accordingly, there is a need for systems and methods that allow a merchant, or third party acting on the merchant's behalf, to identify and select the cost-optimal payment processor on a per transaction basis.